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V2818-20 17 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

Transfer of funds to finance a management company is not subject to VAT

A holding company enquired whether the transfer of funds to a management company of which it is the owner was subject to VAT. The DGT has ruled that such a transfer does not constitute consideration for a service and, therefore, is not subject to the tax.

The question raised

Subjectivity of the transfer made by the applicant entity to the management entity for the amounts collected.

The DGT's ruling

For a transaction to be subject to VAT, there must exist a legal relationship of reciprocal benefits where the remuneration is the consideration for the service. In this case, the funds are not the consideration for an operation of the applicant nor for the transfer to finance the management company. As there is no concrete advantage determining an act of consumption, the transfer is not subject to the tax.

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